foreclosure laws

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In teaching workshops on how to buy homes (oftenlisted on a auctions report), I often write on themarkerboard in big bold letters, "Gain They're Trust to CloseMore Deals".

The principle of gaining the trust of the homeowner threatenedwith is a deal-maker. If they trust you, they aremore likely to accept your offer. Besides that, if you haveearned their trust by explaining their options to them, then ifthey choose to let the home go to auction where it will likelyend up on a auctions report (and you win it) theyare much more likely to vacate the property without a fight.

1. Work with their Current Lender

Forbearance: An agreement between the lender and the borrowerthat reinstates the delinquent loan because the homeowner willput up an initial lump sum of the total delinquency and pay therest over a period of time.

Loan Modification: A change in any of the terms of the originalnote. This includes decreasing the interest rate, re-amortizingthe remaining balance, extending the term of the note.

2. Work with a New Lender

Refinance: Where a new lender loan the borrower monies to payoff existing debt. This option is generally open to borrowersthat face a temporary setback in their financial situation andcan prove that they can afford the new mortgage payment. Mostfinancial institutions will not loan to people unless they havethe above mentioned criteria and at least 20% equity in theresidence.

3. File Bankruptcy

Bankruptcy is a way for people who owe more money than they canpay right now, to either work out a plan to repay the securecreditors over time in Chapter 13 filings, or wipe out(discharge) most of their bill in a Chapter 7 filing. While thedebtor is working out a plan, or the trustee is gathering theavailable assets to sell, the Bankruptcy Code provides thatcreditors must stop all collection efforts against the debtor.What happens to your bills, debts and house will be controlledby the Bankruptcy Code and the Federal Rules of Bankruptcy(theowner will NO longer have control over any of their assets).Bankruptcy will have a serious impact on the credit lives forthe next 10 years.

4. Sell Their Home

List with a Realtor on the MLS (Multiple Listing Service)- Dueto the short period in Texas, listing their homewith an real estate broker and being able to close within 21days is a very unrealistic task due to the new buyers financing.The process of lenders approving the buyers credit, appraisingthe house, completing underwriting, reviewing title, getting anew survey, getting payoff demands and drawing documents--cantake 3-4 weeks to complete (assuming no problems pop up). Justbecause the property is under contract and scheduled to closewill NOT stop the auction.

Sell to an Investor- Selling their house to an investor whooffers " cash at closing"; no new loan contingencies; no repairsto be made (AS IS); fast escrow; a for sure sale providing afresh start with reputation and integrity intact would be theirbest option. Although the investor's price is less, the investorcan salvage the seller's credit, bring loans current, rebuildseller's credit by paying the sellers debt on time every month.This is a much BETTER solution than doing nothing and losingeverything at the auction.

5.Giving Up and Letting it Go:

Deed-in-Lieu: Borrower voluntary conveys the title (property)back to lender in lieu of the lender foreclosing. Most lenderswould rather go through with the auction and clean title byextinguishing inferior liens.

Let it Go to Auction: Obviously, nothing good can come fromthis, the owner loses their home with no money, credit problems,hard to find new housing due to past history and the lender cansue for any deficiency.